One of Midtown Manhattan’s crown jewels is finally a city landmark. The Landmarks Preservation Commission this week designated the Heckscher Building at 730 Fifth Avenue as an individual landmark, officially recognizing the tower’s ornate French Renaissance style, influence on Midtown’s iconic commercial corridor, and overall impact on the New York City skyline. The tower, built [...]
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President Joe Biden on Thursday made a video announcement confirming that the Drug Enforcement Administration will be pursuing a proposed rule to reschedule marijuana, calling the move “monumental” in a video posted to social media.
“Today, my administration took a major step to reclassify marijuana from a Schedule I drug to a Schedule III drug. It’s an important move toward reversing longstanding inequities,” Biden said. “No one should be in jail merely for using or possessing marijuana, period. Far too many lives have been upended because of failed approach to marijuana, and I’m committed to righting those wrongs.”
Shortly after Biden’s video went live, the U.S. Department of Justice confirmed in an emailed statement that it had sent a proposed rule to the federal register, “initiating a formal rulemaking process to consider moving marijuana from a schedule I to schedule III drug under the Controlled Substances Act,” based on the recommendations issued last summer by the Department of Health and Human Services.
“In light of HHS’ medical and scientific determinations, and OLC’s legal advice, the Attorney General exercised his authority under the law to initiate the rulemaking process to transfer marijuana to schedule III,” the DOJ said in a release.
The DOJ noted carefully, however, that the rescheduling process is far from complete, and that “During that process, and until a final rule is published, marijuana remains a schedule I controlled substance.”
The DOJ also shared documents regarding the rescheduling process and the DOJ’s Office of Legal Counsel’s memorandum on rescheduling.
Once the proposed rule is made public in the federal register, the DEA will hold a 60-day public comment period, before then reviewing input and then publishing a proposed final rule, all of which could take months to years, according to legal experts.
But some industry insiders have expressed hope that the Biden administration may have teed up the rescheduling process to conclude much quicker, ideally prior to the November election, to prevent a possible new Trump White House from halting rescheduling altogether, if Biden loses in November.
Regardless, several cannabis industry trade groups — including the U.S. Cannabis Council, the National Cannabis Roundtable, and the Coalition for Cannabis Scheduling Reform — immediately hailed the move by the Biden administration on Thursday, and said it’s a step in the right direction.
Bryan Barash, vice president of cannabis tech platform Dutchie and spokesman for the Coalition for Cannabis Scheduling Reform, said he was “thrilled” at the news.
“This is a huge victory for everyone who has worked to normalize federal cannabis policy and begins the process of federal support for state cannabis markets. Most importantly, for the first time the federal government recognizes the overwhelming evidence of the clear medical benefits of cannabis,” Barash said.
Edward Conklin, executive director of USCC, said in an emailed statement that the trade group “strongly supports” the DEA’s move.
“Moving cannabis down to Schedule III would signal a tectonic shift away from the failed policies of the last 50 years,” Conklin said. “Thanks to President Biden and his administration, the federal government will soon turn the page on prohibition and set the stage for further reforms.”
Saphira Galoob, executive director of the NCR, added that the shift is “a step towards larger federal cannabis reforms.”
“Our work does not end here,” Galoob said, echoing a comment industry sentiment. “While we continue to commend President Biden, the DOJ, and HHS for following the science and not ignoring the need for federal cannabis policies to shift after decades of state leadership, Congress must also take action to further this progress.”
Former Deputy U.S. Attorney General James Cole also asserted in the NCR statement that Congress still has to act in order to set the stage for a legal national marijuana marketplace, as opposed to the patchwork of state-by-state regulatory systems currently in place.
“By recognizing, as the federal government has done, that cannabis does have valuable medical applications and with the overwhelming legalization in the states, Congress must face the simple reality that cannabis is and will be present in our society and do its duty by providing for the safest and most effective regulatory environment to exist,” Cole said.
Thursday’s news is part of an ongoing saga that Biden kickstarted in 2022 with an order for his administration to “expeditiously” review marijuana’s status as a Schedule I narcotic.
If the process is ultimately completed, the biggest benefit to the U.S. cannabis industry will come in the form of tax savings, since the onerous 280E provision of the federal tax code — which bars standard business tax deductions for any company that deals in Schedule I or II substances — won’t apply any longer. That shift alone is expected to save the industry hundreds of millions of dollars per year, if not billions.
But moving marijuana to Schedule III would also leave the entire U.S. marijuana industry still federally illegal, since none of the state-level companies dealing in cannabis are legally permitted by the DEA to traffic in Schedule III drugs. That legal disconnect will still require an act of Congress to solve.
In the interim, many are expecting new updated guidance from the DOJ, such as the defunct Cole Memos that formerly had set the standard for how states could launch cannabis markets without fear of interference from federal agents. Such guidance has yet to be issued or updated since former U.S. Attorney General Jeff Sessions rescinded all cannabis-related DOJ guidance memos in 2018.
This article originally appeared in Green Market Report.
The landmarked building that houses the Home Depot in the Flatiron District is getting a revamp.
Williams Equities is investing $23 million, or $40 per square foot, to renovate the fourth, fifth and six floors of 28-40 W. 23rd St., two adjoining buildings that date back to the 19th century.
Renovation plans include an expanded atrium and a new rooftop terrace, according to a report yesterday from bond-rating firm KBRA.
The Home Depot location that opened in 2004 at street level will be unaffected; its lease for 118,000 square feet continues through 2036. The retailer pays a base rent of $64 per square foot, KBRA said, below the market rate of $75.
Williams is renovating the building after AT&T’s lease for 220,000 square feet expired in March. Prior to AT&T’s exit, the building was 100% leased.
The property’s largest tenant, Estee Lauder subsidiary Aramis, leases 240,000 square feet at $82 per square foot, below the market rate of $92. Its lease expires in 2028. The company initially subleased 66,000 square feet of space in 2012 but has since signed a direct lease and expanded its space four times, KBRA said.
The third tenant, financial-technology company Ramp, leases 66,000 square feet for its corporate headquarters with a lease expiring in 2029. Its rent is $80 per square foot.
In its report, KBRA noted the building faces “concentrated rollover risk” around the time its new $155 million mortgage comes due. The five-year loan carries a 6.1% interest rate and replaces an older $140 million mortgage with a 3.9% rate. A $13 million down payment was put up by Williams Equities, an investment firm founded in 1926 that holds interests in 12 New York office buildings each with more than 3 million square feet.
The address 28-40 W. 23rd consists of two adjoining properties holding 600,000 square feet, one 6 stories high, and the other 12. The building at 28 W. 23rd was built as a department store in 1878 and features a white cast-iron exterior façade, custom decorative pillars, and loft-style floor to ceiling windows. The property at 40 W. 23rd was built a little later and has a stone facade.
A spokesman for Williams had no immediate comment.
Interior images have been revealed for a new block-long condo development in Boerum Hill. Located between 3rd and 4th Avenues in the Brooklyn neighborhood, residential project Bergen is the first condo building designed by Mexico-based architecture studio Taller Frida Escobedo. Residence interiors, conceived by design studio Workstead, complement the tower’s rustic exterior, with a palette [...]
The post See inside Boerum Hill’s Bergen project, Frida Escobedo’s first condo first appeared on 6sqft.
Leases
Law firm takes space in renovated tower by Grand Central
Address: 22 Vanderbilt Ave., Manhattan
Landlord: Milstein Properties
Tenant: Kennedys Law
Lease size: 25,000 square feet
Asset type: Office
Brokers: CBRE’s Paul Amrich, Neil King, Jeffrey Fischer, Sacha Zarba and Meghan Allen, along with site manager Brookfield Properties’ Duncan McCuaig, David Caperna and PJ Massey, represented the landlord. Savills’ Gabe Marans, Perry Kaplan and Maxine Rosen represented the tenant.
Plaza District tower adds fourth-generation clothier
Address: 515 Madison Ave., Manhattan
Landlord: GFP Real Estate
Tenant: Alan David Custom Suits NYC
Lease size: 9,200 square feet
Lease length: 13 years
Asset type: Retail
Brokers: Martin McGrath represented the landlord in-house along with Newmark’s William Grover. Prime Manhattan Realty’s Jonathan Anapol represented the tenant.
Connecticut-focused landlord takes office space in Midtown
Address: 515 Madison Ave., Manhattan
Landlord: GFP Real Estate
Tenant: Kensico Properties
Lease size: 4,500 square feet
Lease length: Five years
Asset type: Office
Brokers: Martin McGrath represented the landlord in-house along with Newmark’s William Grover. Douglas Elliman’s Corey Shuster and Arthur Maglio represented the tenant.
Financings
Gotham Org. refinances luxury rental building on Lower East Side
Address: 55 Suffolk St., Manhattan
Owner: David Picket
Lender: Wells Fargo
Loan amount: $38.2 million
Asset type: Multifamily
Plans for a 23-story office tower in Williamsburg were under examination this week as City Planning Commission officials questioned during a public hearing whether introducing even more offices into an already beleaguered market is the best use of a prime waterfront parcel currently zoned for manufacturing.
A limited liability company called 500 Kent purchased the site at 500 Kent Ave. from Con Edison for $50 million in 2019, city records show. The energy company operated power plants there until shuttering them in 1999; they were demolished a decade later.
In 2014, under the supervision of the state Department of Environmental Conservation, Con Ed remediated the land, which is bounded by Division Avenue to its north, Wallabout Channel to its west and the edge of the Brooklyn Navy Yard to its south.
Crain's reported in 2016 that the city would not rezone the area to allow for condo development, and Mayor Eric Adams — then Brooklyn borough president — said at the time that "this site is going to stay industrial."
The owner of the property, which reportedly includes a partnership with developer Hampshire Properties, together with the United Jewish Organization — led by Rabbi David Niederman as its executive director — want to rezone the nearly 2.7-acre site, now partially vacant and a parking lot for school buses, to allow for commercial and retail use and are proposing to build a tower with about 555,000 square feet of office space and roughly 20,700 square feet of retail, along with about 23,000 square feet of public waterfront access. The co-applicants are also seeking a special permit to facilitate the construction of a 234-spot public parking garage, according to the city filing.
Some members of the City Planning Commission appear to be dubious of the proposed transformation.
"This does not contemplate any manufacturing — this is not a resource we're going to get back. We have seen that office space has not been occupied in this area, including along the waterfront and further up, in the way that one anticipated pre-Covid," Commissioner Gail Benjamin said during the public hearing on the application Wednesday.
The applicant, meanwhile, is so far unwavering in its plans.
"Our client still believes there is a market for this," said Raymond Levin of Manhattan-based law firm Herrick, Feinstein LLP during the hearing, referencing recent leases signed in Two Trees' Domino Park, which is nearby, and in Dumbo. "We're several years away from the project being built."
Community Board 2 voted in favor of the application in March. But Brooklyn Borough President Antonio Reynoso recommended last month that the city reject the proposal, saying in his memo that "this development pattern has foreclosed any future for manufacturing jobs along Brooklyn's former working waterfront."
The Department of City Planning has not yet set a date for a vote on the project, but it will likely be in the next month or two.
This story has been updated to reflect that the property at 500 Kent Ave. is owned by a limited liability company of the same name, not the United Jewish Organization, which is a co-applicant on the project.
This 1899 townhouse at 545 Third Street in Park Slope is ready for Brooklyn brownstone living without the hassle of renovation. The four-story home has the preserved 19th-century details buyers crave–pocket doors, wainscoting, stained glass, and molding–along with modern design flourishes that enhance its historic charm. Asking $6,450,000, the townhouse has bay windows on all [...]
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The commercial real estate sector’s struggles are threatening to spread. Regional and community banks, the primary lenders to commercial real estate borrowers, face a sustained period of deep losses on problematic commercial real estate loans, potentially reaching hundreds of billions of dollars.
This could lead to a string of bank failures as commercial real estate price declines deepen and loans come due this year and next. Structurally weak demand for office properties, along with a prolonged period of high interest rates, pose potentially insurmountable headwinds for the entire commercial real estate market.
Small and mid-sized banks need to start addressing the problem now or face a potentially existential crisis. The risk in the office market is not evenly distributed. New and renovated trophy office buildings in prime locations are in great shape, with low vacancies, strong tenant demand and rent growth. But these towers don’t represent most of the office stock in major cities.
The older class B and C buildings are struggling with tenant flight, higher operational costs, record-high vacancy rates, and downward pressure on rents. These are the buildings that are forcing banks to reevaluate loan terms, shed assets, or take the keys.
In New York City, remote and hybrid work are the new norm, even if some large tech and financial companies have publicly announced plans to curtail workplace flexibility. Labor markets are tight, and with companies eager to retain talent, CEOs are disinclined to force workers back to the office.
Kastle’s “Back-to-Work” Barometer tracks employee card swipes in major metro areas. It shows New York City office workers’ return rate plateauing at about 50% of pre-pandemic activity. The office vacancy rate for Manhattan clocked in at 23.4% in the first quarter of 2024, nearly twice the historical average of 12.7%, according to the real estate firm Cushman & Wakefield.
Companies have a choice: Either lower their real estate expenditures by reducing square footage or draw their employees back to the office by upgrading the experience there—at a similar or higher price per square foot. Most firms face higher operating costs and so are looking for ways to economize on office space. However, this process takes time: The average lease term for Class A properties in Manhattan is roughly 10 years, so many tenants are locked in.
But what might be a smart financial decision for a company, complicates an already difficult situation for property managers, bank lenders, and the broader commercial real estate market. They face sharply higher borrowing costs due to the recent interest rate increases and rise in long-term bond yields.
Those borrowing costs don’t appear likely to come down soon: The Fed has pushed back rate cut expectations and is steadily reducing its balance sheet, lifting its thumb off long-term interest rates. Real estate crises since the 1980s eventually resolved with the help of structurally lower interest rates. Not this time. Some property owners are converting class B/C office towers to residential, but the vast majority of properties are either unsuitable or uneconomical.
Neither development—weak office-property demand and higher interest rates—is a surprise. Still, the paucity of regional and community banks that have lifted commercial real estate loan delinquencies and charge-offs is shocking. These same banks have also done little to lift allowances for future loan losses.
The largest banks already started recognizing higher CRE losses, but they’re not the core of the problem given their diversified lending businesses and strong capital cushions. It’s the smaller banks with greater exposure to commercial real estate that face a “trainwreckoning.”
This doesn’t mean that a full-blown financial system outage—something akin to the 2007-09 global financial crisis—is on the horizon. Some banks will fail, others will muddle through.
Companies should prepare for an extended period of tight lending standards and elevated borrowing costs, as banks come to terms with their commercial real estate problems’ severity. Insufficient liquidity is a danger and risk for all when banks raise charge-offs and recognize problem loans. Prudent corporate managers extend their debts’ maturities and add a cash liquidity buffer before the storm.
While expensive, such measures can mean survival. Some companies will even be able to take advantage of the adverse markets while others are scrambling to survive.
The factors separating the financial institutions that weather this storm are how quickly they reckon with it and their exposure. It is already too late for banks with concentrated exposures that haven’t made the necessary provisions, but others can still act.
Kurt Reiman is a senior economist at The Conference Board, a non-profit research organization at the intersection of business performance and societal advancement.